Key reversal

Quote from Lojanica:

True. One of the things that confounded so many traders was "Why is the market climbing when we are in a recession?"

The world's CB's coordinated an expansion of credit to counteract the deflationary forces at hand.

Now with interest rates bottomed out (end of a 30 year bond bull market) and the commodities market blowing off their bubbly excesses the only safe haven is gonna be cash and equities. So sure it doesn't make sense but I'd say the dips should continue to be bought but not the shallow dips the big fear induced routs like over the last 30 days. Once everyone realizes the sun will rise tomorrow and that they are gonna lose money in bonds and that cash has a negative expectancy due to inflation then guess what the equities market will take off.

Maybe, maybe not and that is what makes a market.

Does anyone really think the FED is gonna pull the plug? Tapering means that less stimulus not no stimulus.

Look at the 70's for jagged markets.

This could go on for years with sell-offs in the 10-20% range and then refilling, hitting the last high or just short or a little higher then retracing. Understanding the macro helps delineate a decent strategy then understanding the micro aids in positioning
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good post, the fed is concerned obviously about deflation, you can see in the tape for the past week this is all about the "taper" or lack thereof, its really the risk on trade expressed thru the various asset classes, dollar, gold, oil, spuz, etc. Enclosed pic of velocity of money which is a reflection of economic activity. When LEH collapsed I think GDP was off like 5-7% in one quarter, ask any small businessman how the end of 2008 was. :)

http://research.stlouisfed.org/fred2/series/M2V/
 

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i gave some facts about the 4 year recovery. i would love to hear why people think the market will run up for years to come. i am not talking about day trades. i enjoy hearing others opinions.

1 emerging markets are getting whacked (60% of US multinational companies revenues come from outside US)
2 europe is in a recession
3 no growth is sales for years in US
4 gdp is still terrible
5 mortgage and interest rates moving up
6 companies PE's grew from low rates, firing higher paid workers, hiring lower paid workers, and getting more production from innovation with less workers
7 70% of consumption is from consumer who is not feeling the extra money in their pockets
8 1 out of 3 workers makes less than 25k a year
 
Quote from brokerboy:

i gave some facts about the 4 year recovery. i would love to hear why people think the market will run up for years to come. i am not talking about day trades. i enjoy hearing others opinions.

1 emerging markets are getting whacked (60% of US multinational companies revenues come from outside US)
2 europe is in a recession
3 no growth is sales for years in US
4 gdp is still terrible
5 mortgage and interest rates moving up
6 companies PE's grew from low rates, firing higher paid workers, hiring lower paid workers, and getting more production from innovation with less workers
7 70% of consumption is from consumer who is not feeling the extra money in their pockets
8 1 out of 3 workers makes less than 25k a year
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Markets tend to get "lopsided" before they "correct"

US equities are the best of the worst.

The FED has filled the gap with Open Market Operations (OMO).

This week can be attributed to CB activity AGAIN.

China's CB troubles handled for the short term.

Jawboning by the District FED Bankers

The realization that OMO is not ending anytime soon.

An oversold market.

We are "back" to where we were---big deal that's sideways for 12-13 years not big new highs or anything.

I think we swing around with 20% corrections and maybe new highs but not stampede to dizzying heights just up down mostly sideways
 
i agree with you on these 3. i am just not sure how lopsided the market move up should or will be. i also agree about the 20% correction. i just think when it gets to that 20% everything can look and feel different so 20% can become 30% or 40% or it can just move right back up too.

what we see right now just feels like guys sitting in a room saying well if Q is something we see in a good market and X + W = Q lets make X and W strong so Q happens. i joke but i am serious haha

Quote from Lojanica:

Markets tend to get "lopsided" before they "correct"

Jawboning by the District FED Bankers

The realization that OMO is not ending anytime soon.
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Trying to predict the direction of the stock market and magnitude of any move is a fool's game. Just follow the price. I've been watching these doomsayer predictions when the market is going up, and the bullish all the time predictions by the buy and holders for years, and yet Wall Street's overall track record is still below that of the S&P 500 itself.

Just my two cents
 
Quote from Lojanica:


The realization that OMO is not ending anytime soon.
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In my view all "modern" economies can't go but down.If central banks or any other entity don't want that,they will manipulate markets and economy forever.It is not possible that they leave markets alone for more than a small period,when they'd realize they'd have to step in again.
If US economy recovers by itself,that will turn my world upside down.For me it's totally unrealizable.
 
Sew. Here we are stitching together a strategy. As always the market's subtleties intrigue and beguile.

First of all in response to the market voodoo quip above here's what I do and it works for me. Just get a couple of limes and squeeze the juice on a chicken bone and throw salt around your entire trading desk perimeter and nothing bad will happen to you OK?

Now for before the 4th and real statistical analysis not just market myths.

Fact 2 days before any major market holiday the market rises (on the whole as statistics show over a large time series of data).

What to do? Friday tomorrow is a biggy trading day. Why? It will set the tone for next week, the end of the month, the end of the quarter, and end of the first half of the year. It leads into next week which if it were to add to the positive expectancy of the data set explained above will go up Tues and Wednesday.

So with where we are now after a biggish sell-off (in the context of the past 3 years) and the subsequent 4 day recovery in progress. The next 4 trading days are important for formulating a strategy (unless of course you're buy and hold).

Now in direct contradistinction the 5th trading day of the month tends to tank and July sucks as a bullish month (The wealthy tend to vacation in July both here and over the pond.)

So perhaps we will rally into July 4th then do the opposite of my cyclotron and sell-off after the 4th of July.

My cyclotron is better at identifying windows of movement and not direction.

Just something to think about. I'm all out of fresh limes (won't work unless they're fresh) and ain't no chicken farms or KFC in my neighborhood so I'm off to the market in preparation for tomorrow's open.

Stay Tuned!!!
 
I was posited a good question and will post Q & A.

Markets rise 2 days before a major holiday.

Why?

It has been speculated perhaps short covering. Going into a 3 or 4 day weekend there would tend to be more short covering than normal. Same reason as earnings announcements. Sell the news.
 
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